Automobile Blog

With gasoline prices at near-record levels, auto makers are preparing to introduce a range of small cars, most costing $14,000 or less. After years of pushing hulking SUVs, the industry is betting that fuel-efficient subcompacts are due for a comeback.

Traditionally, Americans’ appetite for minicars — which are even smaller than compact cars, such as the Honda Civic — has been slim amid concerns that they were too small and dangerous on highways packed with SUVs and powerful sedans. But there are signs of growing consumer interest, not only because of the high mileage, but also due to significantly improved safety technology.

Much of the impetus has been the Chevy Aveo, which was launched at the beginning of last year. It has been a surprise hit for General Motors Corp. and ranks as the best-selling economy car in the U.S. Through June, sales of the Korean-made car, which gets more than 30 miles per gallon and has a base price of $9,995, are up 66 percent from the year-earlier period, outpacing Scion xA, the Kia Rio and the Hyundai Accent.

Overall, sales of minicars are expected to reach at least 410,000 vehicles a year by 2007, more than doubling from last year, according to CSM Worldwide of Farmington Hills, Mich., which counts a car as “mini” if it’s less than about 14 feet in length. By contrast, a Ford Expedition SUV is more than 17 feet long. Sales of large, gas-thirsty SUVs — which fueled industry profits in recent years — have since slowed considerably.

Now the major Japanese auto makers, Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co., are looking to grab a piece of the action. As early as the spring, Toyota is likely to launch in the U.S. a version of a popular minicar currently sold in Japan as the Vitz, according to executives familiar with the plans. The snub-nosed Vitz, which was recently redesigned and has sort of an egg shape, is expected to replace the Echo, an aging model that has proven to be one of Toyota’s biggest recent flops in the U.S., in part because it came out in 1999 when gasoline cost about a dollar a gallon but also because of its stodgy styling.

Honda is also expected to roll out a minicar in the spring, most likely a version of its hatchback known as the Fit in Asia and the Jazz in Europe. At Nissan, one of the minicars being considered for the U.S. market next year is the Tiida, a minicar sold in Japan and China, and which has a body shape that hints at the Nissan Murano, the SUV-car crossover vehicle.

In Japan, the vehicles typically sell for between 1.2 million yen to 1.5 million yen, or about $10,800 to $13,500. A Toyota Vitz with a three-cylinder engine is priced at 1.05 million yen. Most Japan-market minis go 16 to 20 kilometers on one liter of gasoline, which is roughly 38 to 47 miles per gallon, depending on models and engine sizes. The mileage would likely differ if measured under U.S. standards.

Ford Motor Co. and Chrysler Group of DaimlerChrysler AG are also considering launching mini vehicles in the U.S., but neither has concrete plans as yet. Ford has shown over the past few years three minivehicle concepts, including the boxy van called SynUS. Launching a minicar in the U.S. is “something we are looking at and continue to look at,” said Said Deep, a Ford spokesman.

A GM spokesman says the company doesn’t have any plans to add additional minicars to its lineup in the wake of its Aveo success. The car is built in South Korea by GM and sold in major markets around the world. A redesign is already on the market in Asia, and is expected to arrive in the U.S. market in the near future.

Small cars such as these are becoming safer to drive amid recent technological innovations that are helping auto makers overcome one of the biggest consumer reservations about driving minicars: safety. When it reaches the U.S. market, the Honda Fit will have side airbags and antilock brakes as standard equipment. The Aveo received five-star crash rating by the National Highway Traffic Safety Administration. The Toyota Vitz was designed offset one of the basic problems that small cars traditionally have had in collisions — namely, that a smaller vehicle is at risk of sliding underneath a bigger SUV or truck.

Economical microcars still make up only a small segment of automobiles in the U.S., accounting for just 1 percent of total U.S. vehicles sales, according to CSM Worldwide. But auto makers have been encouraged by the strong sales of BMW AG’s Mini, despite it’s comparatively high price of $17,500 for a base model, as well as the early success of Toyota’s youth-oriented and budget-priced Scion brand. Last year, BMW sold 36,032 Minis, and Scion racked up 99,259 in vehicle sales in the U.S. across the three cars in that line.

New minicars from the Japanese Big Three also fill a significant gap in entry-level cars for those auto makers — a situation they created themselves over the years by scaling up their small-car entries such as the Honda Civic, the Nissan Sentra and the Toyota Corolla to meet customer demand for more room and comfort. Indeed, the current Civic is bigger than the Accord that Honda sold in the late 1970s.

Other auto makers are eyeing the entry-level market, too, given that the next generation of car buyers, currently 10 to 24 years old, is expected to represent 40 percent of the U.S. market in 15 years, according to CSM Worldwide. Chevy marketing officials say that some 26 percent of Aveo buyers so far are first-time buyers.